UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from _____________ to ___________________.
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| The
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of May 16, 2022, there were shares of common stock outstanding.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Accounts receivable - related parties, net of allowance of $ | ||||||||
| Advances to employees | ||||||||
| Inventory | ||||||||
| Real estate lots held for sale | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Long Term Assets | ||||||||
| Accounts receivable, non-current portion, net | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Prepaid foreign taxes, net | ||||||||
| Intangible assets | ||||||||
| Investment - related parties | ||||||||
| Deposits | ||||||||
| Total Assets | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses, current portion | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Loans payable, current portion | ||||||||
| Debt obligations | ||||||||
| Convertible debt obligations, net | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Accrued expenses, non-current portion | ||||||||
| Operating lease liabilities, non-current portion | ||||||||
| Loans payable, non-current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 16) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, shares authorized, issued and outstanding | ||||||||
| Common stock, par value $ per share; shares authorized; and shares issued and and shares outstanding as of March 31, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost, shares at March 31, 2022 and December 31, 2021 | ( | ) | ( | ) | ||||
| Total Gaucho Group Holdings, Inc. Stockholders’ Equity | ||||||||
| Non-controlling interest | ( | ) | ||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Sales | $ | $ | ||||||
| Cost of sales | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating Expenses | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Depreciation and amortization | ||||||||
| Total operating expenses | ||||||||
| Loss From Operations | ( | ) | ( | ) | ||||
| Other Expense (Income) | ||||||||
| Interest expense, net | ||||||||
| Forgiveness of PPP loan | ( | ) | ||||||
| Other income | ( | ) | ||||||
| Gains from foreign currency translation | ( | ) | ( | ) | ||||
| Total other (income) expense | ( | ) | ||||||
| Net Loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interest | ||||||||
| Net Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Net Loss Per Common Share | ||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Number of Common Shares Outstanding | ||||||||
| Basic and Diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income : | ||||||||
| Foreign currency translation adjustments | ||||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to non-controlling interests | ||||||||
| Comprehensive loss attributable to controlling interests | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(unaudited)
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated Other Comprehensive | Accumulated | Gaucho Group Holdings Stockholders’ | Non-controlling | Total Stockholders’ | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Deficiency | Interest | Equity | |||||||||||||||||||||||||||||||
| Balance - January 1, 2022 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||||||||||||||
| Options | - | - | ||||||||||||||||||||||||||||||||||||||
| 401(k) | - | |||||||||||||||||||||||||||||||||||||||
| Common stock issued for purchase of minority interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Common stock issued for acquisition of GDS | - | |||||||||||||||||||||||||||||||||||||||
| Common stock issued for purchase of domain name | - | |||||||||||||||||||||||||||||||||||||||
| Warrants issued for modification of convertible debt principal | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2022 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIENCY) EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(unaudited)
| Series B | Gaucho Group | |||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Redeemable | Additional | Accumulated Other | Holdings Stockholders’ | Non- | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury Stock | Paid-In | Comprehensive | Accumulated | Deficiency | controlling | (Deficiency) | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | (Equity) | Interest | Equity | |||||||||||||||||||||||||||||||||||||
| Balance - January 1, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Options and warrants | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued for cash, in public offering, net of offering costs [1] | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued for cash | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued to underwriter in public offering | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants issued upon exchange of debt and accrued interest | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued upon conversion of Series B Convertible Preferred Stock | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||||||||||
| Effect of reverse stock split | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
| [1] |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation: | ||||||||
| 401(k) stock | ||||||||
| Options and warrants | ||||||||
| Noncash lease expense | ||||||||
| Gain on foreign currency translation | ( | ) | ( | ) | ||||
| Unrealized investment losses | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Provision for (recovery of) uncollectible assets | ( | ) | ||||||
| Forgiveness of PPP Loan | ( | ) | ||||||
| Decrease (increase) in assets: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Employee advances | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Deposits | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Other liabilities | ( | ) | ( | ) | ||||
| Total Adjustments | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Used in Investing Activities | ||||||||
| Cash paid to acquire GDS, net of cash acquired | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of intangible asset | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Provided by Financing Activities | ||||||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Proceeds from underwritten public offering, net of offering costs (1) | ||||||||
| Cash offering costs paid for underwritten public offering | ( | ) | ||||||
| Proceeds from sale of common stock and warrants | ||||||||
| Net Cash (Used in) Provided by Financing Activities | ( | ) | ||||||
| Effect of Exchange Rate Changes on Cash | ||||||||
| Net (Decrease) Increase in Cash | ( | ) | ||||||
| Cash - Beginning of Period | ||||||||
| Cash - End of Period | $ | $ | ||||||
| (1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 7 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-Cash Investing and Financing Activity | ||||||||
| Equity issued to satisfy accrued stock-based compensation expense | $ | $ | ||||||
| Equity issued as consideration for intangible assets | $ | $ | ||||||
| Equity issued for purchase of non-controlling interest | $ | $ | ||||||
| Equity issued for acquisition of GDS | $ | $ | ||||||
| Warrants issued and debt principal exchanged upon modification of convertible debt | $ | $ | ||||||
| Common stock and warrants issued upon exchange of debt and accrued interest | $ | $ | ||||||
| Series B Preferred stock converted to common stock | $ | $ | ||||||
| Reclassification of deferred offering costs to additional paid in capital | $ | $ | ||||||
| Common stock and warrants issued to underwriter in public offering | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 8 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES
Organization and Operations
Through its subsidiaries, Gaucho Group Holdings, Inc. (“Company”, “GGH”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops, and operates a collection of luxury assets, including real estate development, fine wines, and a boutique hotel in Argentina, as well as an e-commerce platform for the sale of high-end fashion and accessories.
As wholly owned subsidiaries of GGH, InvestProperty Group, LLC (“IPG”) and Algodon Global Properties, LLC (“AGP”) operate as holding companies that invest in, develop and operate global real estate and other lifestyle businesses such as wine production and distribution, golf, tennis, and restaurants.
GGH operates its properties through its ALGODON® brand. IPG and AGP have invested in two ALGODON® brand projects located in Argentina. The first project is Algodon Mansion, a Buenos Aires-based luxury boutique hotel property that opened in 2010 and is owned by the Company’s subsidiary, The Algodon – Recoleta, SRL (“TAR”). The second project is the redevelopment, expansion and repositioning of a Mendoza-based winery and golf resort property now called Algodon Wine Estates (“AWE”), the integration of adjoining wine producing properties, and the subdivision of a portion of this property for residential development. On February 3, 2022, the Company acquired additional real estate through the acquisition of 100% ownership in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L. (“GDS”).
GGH
also manufactures, distributes, and sells high-end luxury fashion and accessories through its subsidiary, Gaucho Group, Inc. (“GGI”).
GGH held a
On
June 14, 2021, the Company formed a wholly-owned subsidiary, Gaucho Ventures I – Las Vegas, LLC (“GVI”), and on June
17, 2021, Gaucho Group Holdings, Inc announced the signing of an agreement between GVI and LVH Holdings LLC (“LVH”) to develop
a project in Las Vegas, Nevada. As of March 31, 2022, the Company had contributed total capital of $
Non-Controlling interest
As
a result of the 2019 conversion of certain convertible debt into shares of Gaucho Group, Inc. (“GGI”) common stock, GGI investors
obtained a
| 9 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Risks and Uncertainties
In December 2019, the 2019 novel coronavirus (“COVID-19”) surfaced in Wuhan, China. The World Health Organization declared the outbreak as a global pandemic in March 2020. resulting in the temporarily closure of our corporate office, and the temporary suspension of our hotel, restaurant, winery operations, golf and tennis operations, and our real estate development operations. Further, some outsourced factories from which Gaucho ordered products had closed, borders for importing product had been impacted and the Gaucho fulfillment center was also closed for several weeks. In response, the Company reduced its costs by negotiating out of its New York lease, renegotiating with vendors, and implementing salary reductions. The Company also created an e-commerce platform for our wine sales in response to the pandemic. As of the date of this report, The Company has resumed real estate development operations and has re-opened its winery and golf and tennis facilities, as well as its hotels.
The Company is continuing to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on the Company’s operations, financial position and cash flows, as well as the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company’s future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2022 and for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on April 14, 2022.
Liquidity
As
of March 31, 2022, the Company had cash and a working capital deficit of $
The Company expects that its cash on hand, plus additional cash from the sales of common stock under the Purchase Agreement (see Note 15 –Stockholders’ Equity) will fund its operations for at least 12 months after the issuance date of these financial statements.
| 10 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.
Highly Inflationary Status in Argentina
The
Company recorded gains on foreign currency transactions of $
Concentrations
The
Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to $
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets.
The Company earns revenues from the sale of real estate lots, as well as hospitality, food & beverage, other related services, and from the sale of clothing and accessories. The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
| 11 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Real estate sales | $ | $ | ||||||
| Hotel rooms and events | ||||||||
| Restaurants | ||||||||
| Winemaking | ||||||||
| Agricultural | ||||||||
| Golf, tennis and other | ||||||||
| Clothes and accessories | ||||||||
| Total revenues | $ | $ | ||||||
Revenue from the sale of food, wine, agricultural products, clothes and accessories is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered, and the performance obligation has been satisfied. Revenues from gift card sales are recognized when the card is redeemed by the customer. The Company does not adjust revenue for the portion of gift card values that is not expected to be redeemed (“breakage”) due to the lack of historical data. Revenue from real estate lot sales is recorded when the lot is deeded, and legal ownership of the lot is transferred to the customer.
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Deferred revenues associated with real estate lot sale deposits are recognized as revenues (along with any outstanding balance) when the lot sale closes, and the deed is provided to the purchaser. Other deferred revenues primarily consist of deposits accepted by the Company in connection with agreements to sell barrels of wine, advance deposits received for grapes and other agricultural products, and hotel deposits. Wine barrel and agricultural product advance deposits are recognized as revenues (along with any outstanding balance) when the product is shipped to the purchaser. Hotel deposits are recognized as revenue upon occupancy of rooms, or the provision of services.
Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.
As
of March 31, 2022 and December 31, 2021, the Company had deferred revenue of $
| 12 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Basic loss per common share is computed by dividing net loss attributable to GGH common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments.
| As of March 31, | ||||||||
| 2022 | 2021 | |||||||
| Options | ||||||||
| Warrants | ||||||||
| Convertible debt | ||||||||
| Total potentially dilutive shares | ||||||||
Recently Adopted Accounting Pronouncements
On May 3, 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its condensed consolidated financial statements.
3. ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L.
On
February 3, 2022, the Company, through its subsidiaries, acquired
| 13 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The
acquisition was accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired was represented
by a group of similar assets. The total purchase consideration of $
| Land | $ | |||
| Building | ||||
| Cash | ||||
| Prepaid expenses | ||||
| Deferred tax credits | ||||
| Accounts payable | ( | ) | ||
| Accrued taxes payable | ( | ) | ||
| Related Party Payable (AWE & TAR) | ( | ) | ||
| Lease Deposit Payable | ( | ) | ||
| $ |
4. INVENTORY
Inventory at March 31, 2022 and December 31, 2021 was comprised of the following:
| March 31, 2022 | December 31, 2021 | |||||||
| Vineyard in process | $ | $ | ||||||
| Wine in process | ||||||||
| Finished wine | ||||||||
| Clothes and accessories | ||||||||
| Clothes and accessories in process | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
| 14 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| March 31, 2022 | December 31, 2021 | |||||||
| Buildings and improvements | $ | $ | ||||||
| Real estate development | ||||||||
| Land | ||||||||
| Furniture and fixtures | ||||||||
| Vineyards | ||||||||
| Machinery and equipment | ||||||||
| Leasehold improvements | ||||||||
| Computer hardware and software | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
and amortization of property and equipment was $
6. INTANGIBLE ASSETS
On
February 3, 2022, the Company purchased the domain name Gaucho.com, in exchange cash consideration of $
The
Company recognized $
| April 1 through December 31, 2022 | $ | |||
| For the years ended December 31, | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| $ |
| 15 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or developed by the Company. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1 - Valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include actively traded equity securities.
Level 2 - Valued based on (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) from market corroborated inputs. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted.
Level 3 - Valued based on valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments, and certain commitments and guarantees.
The carrying amounts of the Company’s short-term financial instruments including cash, accounts receivable, advances and loans to employees, prepaid taxes and expenses, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the Company’s loans payable, debt obligations and convertible debt obligations approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities.
8. ACCRUED EXPENSES
Accrued expenses are comprised of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accrued compensation and payroll taxes | $ | $ | ||||||
| Accrued taxes payable - Argentina | ||||||||
| Accrued interest | ||||||||
| Accrued placement agent commissions | ||||||||
| Other accrued expenses | ||||||||
| Accrued expenses, current | ||||||||
| Accrued payroll tax obligations, non-current | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 16 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On
November 27, 2020, the Company entered into various payment plans, pursuant to which it agreed to pay its Argentine payroll tax obligations
over a period of
9. DEFERRED REVENUE
Deferred revenue is comprised of the following:
| March 31, 2022 | December 31, 2021 | |||||||
| Real estate lot sales deposits | $ | $ | ||||||
| Other | ||||||||
| Leased property deposit | ||||||||
| Total | $ | $ | ||||||
The
Company accepts deposits in conjunction with agreements to sell real estate building lots at Algodon Wine Estates in the Mendoza wine
region of Argentina. These lot sale deposits are generally denominated in U.S. dollars. The Company executed new agreements for the sale
of one additional lot during the three months ended March 31, 2022 and recorded deferred revenues in the amount of $
10. LOANS PAYABLE
The Company’s loans payable are summarized below:
| March 31, 2022 | December 31, 2021 | |||||||
| EIDL | $ | $ | ||||||
| 2018 Loan | ||||||||
| Total loans payable | ||||||||
| Less: current portion | ||||||||
| Loans payable, non-current | $ | $ | ||||||
During
the three months ended March 31, 2022, the Company made principal payments in the amount of $
The
Company incurred interest expense related to the loans payable in the amount of $
| 17 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
11. CONVERTIBLE DEBT OBLIGATIONS
Amounts owed pursuant to the Company’s convertible debt obligations are as follows:
| Principal | Debt Discount | Convertible debt, net of discount | ||||||||||
| Balance at January 1, 2022 | $ | $ | ( | ) | $ | |||||||
| Less: Debt principal exchanged for warrants | ( | ) | ( | ) | ( | ) | ||||||
| Amortization of debt discount | ||||||||||||
| Balance at March 31, 2022 | $ | $ | ( | ) | $ | |||||||
On
November 3, 2021, the Company sold senior secured convertible notes of the Company, in the aggregate original principal amount of $
On
February 22, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with holders of GGH Notes. Pursuant
to the Exchange Agreement, the Company is able to defer monthly principal payments until May 7, 2022 and will make six monthly payments
in the amount of $
The GGH Notes include several embedded features that require bifurcation. However, management has determined that the value of these bifurcated derivatives is de minimis as of November 3, 2021 (date of the agreement), December 31, 2021 and March 31, 2022.
The GGH Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries and are secured by all existing and future assets of the Company, as well as shares of common stock and certain options to purchase common stock of the Company owned by the President and CEO of the Company.
Holders of GGH Notes are entitled to certain registration rights, pursuant to a registration rights agreement between the holders of the GGH Notes and the Company, dated November 9, 2021.
Upon
the issuance of the GGH Notes, the Company recorded a debt discount at issuance in the aggregate amount $
| 18 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The
Company incurred total interest expense of $
12. SEGMENT DATA
The
Company’s financial position and results of operations are classified into
| ● | Real Estate Development, through AWE and TAR, including hospitality and winery operations, which support the ALGODON® brand. | |
| ● | Fashion (e-commerce), through GGI, including the manufacture and sale of high-end fashion and accessories sold through an e-commerce platform. | |
| ● | Corporate, consisting of general corporate overhead expenses not directly attributable to any one of the business segments. |
The Company has recast its financial information and disclosures for the prior period to reflect the segment disclosures as if the current presentation had been in effect throughout all periods presented. The following tables present segment information for the three months ended March 31, 2022 and 2021:
| For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||
| Real Estate Development | Fashion (e-commerce) | Corporate | TOTAL | Real Estate Development | Fashion (e-commerce) | Corporate | TOTAL | |||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Revenues from Foreign Operations | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| 19 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following tables present segment information as of March 31, 2022 and December 31, 2021:
| As of March 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||
| Real Estate Development | Fashion (e-commerce) | Corporate | TOTAL | Real Estate Development | Fashion (e-commerce) | Corporate | TOTAL | |||||||||||||||||||||||||
| Total Property and Equipment, net | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total Property and Equipment, net in Foreign Countries | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
13. RELATED PARTY TRANSACTIONS
Assets
Accounts
receivable – related parties of $
Expense Sharing
On
April 1, 2010, the Company entered into an agreement with a Related Party to share expenses such as office space, support staff, professional
services, and other operating expenses (the “Related Party ESA”). During the three months ended March 31, 2022 and 2021,
the Company recorded a contra-expense of $
14. BENEFIT CONTRIBUTION PLAN
The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction.
A
participant is always fully vested in their account, including the Company’s contribution. For the three months ended March 31,
2022 and 2021, the Company recorded a charge associated with its contribution of $
| 20 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
15. STOCKHOLDERS’ EQUITY
Common Stock
On
February 3, 2022, the Company issued shares of common stock and paid $
On
February 3, 2022, the Company issued shares of its common stock, valued at $
On
March 28, 2022, the Company issued shares of its common stock, valued at $
Accumulated Other Comprehensive Loss
For
three months ended March 31, 2022 and 2021, the Company recorded a gain of $
Warrants
A summary of warrant activity during the three months ended March 31, 2022 is presented below:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Life in Years | Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2022 | $ | |||||||||||||||
| Issued | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Canceled | ||||||||||||||||
| Outstanding, March 31, 2022 | $ | $ | ||||||||||||||
| Exercisable, March 31, 2022 | $ | $ | ||||||||||||||
See Note 11 – Convertible Debt Obligations for details regarding warrants issued during the three months ended March 31, 2022.
| 21 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||
| Exercise Price | Exercisable Into | Outstanding Number of Warrants | Weighted Average Remaining Life in Years | Exercisable Number of Warrants | ||||||||||||
| $ | ||||||||||||||||
| $ | ||||||||||||||||
| $ | ||||||||||||||||
| Total | ||||||||||||||||
Stock Options
No stock options were granted during the three months ended March 31, 2022 or the three months ended March 31, 2021. The following table presents information related to GGH stock options outstanding as of March 31, 2022:
| Options Outstanding | Options Exercisable | |||||||||||||
| Weighted | ||||||||||||||
| Outstanding | Average | Exercisable | ||||||||||||
| Exercise | Number of | Remaining Life | Number of | |||||||||||
| Price | Options | In Years | Options | |||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
During the three months ended March 31, 2022 and 2021, the Company recorded stock-based compensation expense of $ and $, respectively, related to stock options for the purchase of GGH common stock, which is reflected as general and administrative expenses (classified in the same manner as the grantees’ wage compensation) in the accompanying condensed consolidated statements of operations. As of March 31, 2022, there was $ of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of years.
| 22 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Gaucho Group, Inc. Stock Options
As
of March 31, 2022, options to purchase
16. COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. After consulting legal counsel, the Company does not believe that the outcome of any such pending or threatened litigation will have a material adverse effect on its financial condition or results of operations. However, as is inherent in legal proceedings, there is a risk that an unpredictable decision adverse to the Company could be reached. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable.
17. LEASES
On
April 8, 2021, GGI entered into a lease agreement to lease a retail space in Miami, Florida for
As of March 31, 2022, the Company had no leases that were classified as a financing lease. There were no operating leases in effect during the three months ended March 31, 2021.
Total
operating lease expenses were $
| 23 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Supplemental cash flow information related to leases was as follows:
| For the Three Months Ended | ||||
| March 31, 2022 | ||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from operating leases | ||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||
| Operating leases | ||||
| Remaining lease term | ||||
| Weighted Average Discount Rate: | ||||
| Operating leases | % | |||
Future minimum lease commitments are as follows:
| For the period April 1 through December 31, 2022 | $ | |||
| For the years ended December 31, | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | $ |
The
Company is the lessor of a building and land that it purchased in connection with acquisition of GDS, pursuant to an operating lease
which expires on August 31, 2031. At the end of the leases, the lessee may enter into a new lease or return the asset, which would be
available to the Company for releasing. The Company recorded lease revenue of $
| 24 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
18. SUBSEQUENT EVENTS
Convertible Debt Amendment and Conversion
On May 2, 2022, the Company entered into a letter agreement with the holders of GGH Notes (the “Letter
Agreement”). The Letter Agreement provides for the reduction of the conversion price for shares of the Company’s common
stock from $to
$between
May 3, 2022 through May 13, 2022. Further, On May 12, 2022, the Company entered into a conversion agreement with the holders of GGH Notes (the “Conversion
Agreement”) pursuant to which the parties agreed to reduce the Conversion Price to $ and the holders of GGH Notes have committed
to converting up to
During
the period from May 2, 2022 through May 11, 2022, principal, interest and fees in the amount of $
Common Stock Issued
From April 19, 2022 through May 11, 2022, , the
Company sold shares of the Company’s common stock to for aggregate gross proceeds of $
Foreign Currency Exchange Rates
The
Argentine Peso to United States Dollar exchange rate was
The
British pound to United States dollar exchange rate was
| 25 |
Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We disclaim any obligation to update forward-looking statements.
Unless the context requires otherwise, references in this document to “GGH”, “we”, “our”, “us” or the “Company” are to Gaucho Group Holdings, Inc. and its subsidiaries.
Please note that because we qualify as an emerging growth company and as a smaller reporting company, we have elected to follow the smaller reporting company rules in preparing this Quarterly Report on Form 10-Q.
Overview
Gaucho Group Holdings, Inc. (“GGH” or the “Company”) positions its e-commerce leather goods, accessories, and fashion brand, Gaucho – Buenos Aires™, as one of luxury, creating a platform for the global consumer to access their piece of Argentine style and high-end products. With a concentration on leather goods, ready-to-wear and accessories, this is the luxury brand in which Argentina finds its contemporary expression. During the first quarter of 2022, the Company launched Gaucho Casa, a Home & Living line of luxury textiles and home accessories, which will be marketed and sold on the Gaucho – Buenos Aires e-commerce platform. Gaucho Casa challenges traditional lifestyle collections with its luxury textiles and home accessories rooted in the singular spirit of the gaucho aesthetic. GGH seeks to grow its direct-to-consumer online products to global markets in the United States, Asia, the United Kingdom, Europe, and Argentina. We intend to focus on e-commerce and scalability of the Gaucho – Buenos Aires and Gaucho Casa brands, as real estate in Argentina is politically sensitive.
GGH’s goal is to become recognized as the LVMH (“Louis Vuitton Moët Hennessy”) of South America’s leading luxury brands. Through one of its wholly owned subsidiaries, GGH also owns and operates legacy investments in the boutique hotel, hospitality and luxury vineyard property markets. This includes a golf, tennis and wellness resort, as well as an award winning, wine production company concentrating on Malbecs and Malbec blends. Utilizing these wines as its ambassador, GGH seeks to further develop its legacy real estate, which includes developing residential vineyard lots located within its resort.
Due to COVID-19, we have terminated the corporate office lease and senior management works remotely. GGH’s local operations are managed by professional staff with substantial hotel, hospitality and resort experience in Buenos Aires and San Rafael, Argentina.
| 26 |
Recent Developments and Trends
On January 25, 2022, at the Special Meeting of the Stockholders of the Company, for purposes of complying with the Nasdaq Exchange Cap rule, the stockholders approved the issuance of up to 12,164,213 shares pursuant to the Securities Purchase Agreement. On January 11, 2022, we filed a registration statement on Form S-1 to register up to 12,164,213 shares of our common stock for resale by the Investors upon conversion of the Notes.
On February 3, 2022, we purchased the domain name Gaucho.com for $34,999 in cash and 15,000 shares of common stock, subject to adjustment. The seller is entitled to additional shares if the closing price per share is less than $2.64 on August 14, 2022, such that the value of the total shares issued to the seller collectively has a fair market value of $36,900.
On February 3, 2022, we, acquired 100% of Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L., in exchange for issuing 1,283,423 shares of common stock to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management.
On February 28, 2022, we offered to purchase up to 5,266,509 shares of common stock of Gaucho Group, Inc., a Delaware corporation and private company (“GGI”) in exchange for an aggregate of approximately 1,042,788 shares of common stock of the Company, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Share Exchange and Subscription Agreement. Prior to March 28, 2022 we held 79% of the shares of GGI. On March 28, 2022, we issued 1,042,788 shares of our common stock to the minority holders of GGI, in exchange for the remaining 21% ownership GGI.
The global impact of COVID-19 and its variants (“COVID-19”) pandemic continues to evolve. We continue to closely monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on our operations, financial position and cash flows, as well as the impact on our employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact our future operations and liquidity remains uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.
Consolidated Results of Operations
Three months ended March 31, 2022 compared to three months ended March 31, 2021
Overview
We reported a net loss of approximately $2.3 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively.
Revenues
Revenues from operations were approximately $426,000 and $275,000 during the three months ended March 31, 2022 and 2021, respectively, reflecting an increase of approximately $151,000 or 55%. Increases in real estate lot revenues of approximately $187,000 and increases in hotel, wine and agricultural sales of approximately $119,000 resulting from the easing of COVID restrictions and the Argentine government’s efforts to promote tourism and revitalize local businesses by subsidizing a portion of sales, were partially offset by a decrease of approximately $106,000 in restaurant sales as the result of our restaurants being closed for renovations during the period, and a decrease of approximately $61,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar.
| 27 |
Gross profit
We generated a gross profit of approximately $187,000 and $116,000 for the three months ended March 31, 2022 and 2021, respectively, representing an increase of approximately $71,000 or 62%.
Cost of sales, which consists of real estate lots, raw materials, direct labor and indirect labor associated with our business activities, increased by approximately $79,000 from approximately $159,000 for the three months ended March 31, 2021 to approximately $238,000 for the three months ended March 31, 2022. The increase in cost of sales resulted from the increase in hotel, restaurant, and wine costs of approximately $121,000 which corresponds to the increase in the related revenues as discussed above, and an increase in real estate costs of approximately $20,000, which were partially offset by the decrease of approximately $61,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar.
Selling and marketing expenses
Selling and marketing expenses were approximately $172,000 and $117,000 for the three months ended March 31, 2022 and 2021, respectively, representing an increase of $55,000 or 47%, primarily related to GGI advertising and marketing expenses for GGI’s new retail space.
General and administrative expenses
General and administrative expenses were approximately $1,745,000 and $1,358,000 for the three months ended March 31, 2022 and 2021, respectively, representing an increase of $387,000 or 28%. Increases primarily consisting of (i) $181,000 increase in professional fees primarily related to a special stockholder meeting held during the first quarter of 2022, (ii) the increase of approximately $100,000 in consulting fees related to new hotel development projects in Argentina, (iii) increase in rent and occupancy costs of approximately $117,000 related to GGI’s new retail space, (iv) increase in travel expenses of approximately $107,000 related to investor travel to Argentina, and travel related to hotel development, were partially offset by a decrease of approximately $54,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar.
Depreciation and amortization expense
Depreciation and amortization expense was approximately $46,000 and $37,000 during the three months ended March 31, 2022 and 2021, respectively, representing an increase of $9,000 or 24%, related to new asset purchases.
Interest expense, net
Interest expense, net was approximately $754,000 and $6,000 during the three months ended March 31, 2022 and 2021, respectively, representing an increase of $748,000. The increase is the result of accrued interest, and amortization of debt discount related to convertible debt issued in November of 2021.
Other income
Other income of approximately $75,000 during the three months ended March 31, 2022 represents the management fee received from LVH.
| 28 |
Liquidity and Capital Resources
We measure our liquidity a variety of ways, including the following:
| March 31, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| Cash | $ | 977,611 | $ | 3,649,407 | ||||
| Working Capital (Deficiency) | $ | (2,788,934 | ) | $ | (499,419 | ) | ||
| Loans Payable | $ | 289,740 | $ | 317,356 | ||||
| Debt Obligations | $ | 7,000 | $ | 7,000 | ||||
| Convertible Debt Obligations | $ | 6,479,700 | $ | 6,480,000 | ||||
Cash requirements for our current liabilities include approximately $1.5 million for accounts payable and accrued expenses, approximately $196,000 for lease liabilities, and approximately $150,000 for debt obligations and other current liabilities. We also have convertible debt obligations in the amount of $6,480,000 which, if not converted prior to maturity, are due on November 2, 2022. Cash requirements for our long-term liabilities include approximately $1.5 million for operating lease liabilities, approximately $121,000 related to a payment plan for Argentine payroll taxes, and approximately $94,000 for loans payable. In addition, we are obligated to make additional capital contributions in the aggregate amount of $28.0 million to LVH pursuant to the LVH LLC Agreement.
During the three months ended March 31, 2022 and 2021, we financed our activities from proceeds derived from debt and equity financings occurring in prior periods. A significant portion of the funds have been used to cover working capital needs and personnel, office expenses and various consulting and professional fees.
Net cash used in operating activities for the three months ended March 31, 2022 and 2021 amounted to approximately $2,099,000 and $2,075,000, respectively. During the three months ended March 31, 2022, the net cash used in operating activities was primarily attributable to the net loss of approximately $2,272,000 adjusted for approximately $570,000 of net non-cash expenses, and approximately $383,000 of cash used to fund changes in the levels of operating assets and liabilities. During the three months ended March 31, 2021 the net cash used in operating activities was primarily attributable to the net loss of approximately $1,140,000, less approximately $45,000 of net non-cash income, and approximately $889,000 of cash used to fund changes in the levels of operating assets and liabilities.
Cash used in investing activities for the three months ended March 31, 2022 and 2021 amounted to approximately $810,000 and $17,000, respectively, related to the purchase of property and equipment of $767,000 and $17,000, respectively, and $35,000 and $0, respectively, related to the purchase the gaucho.com domain name and $7,560 and $0, respectively, of cash used for the purchase of GDS.
Net cash used in financing activities for the three months ended March 30, 2022, amounted to approximately $26,000 and the net cash provided by financing activities for the three months ended March 31, 2021, amounted to approximately $7,326,000. For the three months ended March 31, 2021, the net cash provided by financing activities resulted from approximately $7,287,000 of proceeds provided by the sale of common stock and warrants in a public offering and $439,000 from the proceeds from the sale of common stock and warrants to accredited investors, partially offset by payments of offering costs related to the public offering of approximately $320,000 and loan repayments of approximately $80,000.
| 29 |
As of March 31, 2022, the Company had cash and a working capital deficit of $977,611 and $2,788,934, respectively. During the three months ended March 31, 2022 and 2021, the Company incurred a net loss of $2,272,101 and $1,140,360, respectively, and used cash in operating activities of $2,099,246 and $2,075,085, respectively. We expect that the cash on hand plus additional cash from the sales of common stock under our equity line of credit agreement will fund our operations for a least 12 months after the issuance date of these financial statements.
Since inception, our operations have primarily been funded through proceeds received in equity and debt financings. We believe we have access to capital resources and continue to evaluate additional financing opportunities. There is no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds we might raise will enable us to complete our development initiatives or attain profitable operations.
Availability of Additional Funds
As a result of the above developments, we have been able to sustain operations. However, we will need to raise additional capital in order to meet our future liquidity needs for operating expenses and capital expenditures, including GGI inventory production, development of the GGI e-commerce platform, expansion of our winery and additional investments in real estate development. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations.
Off-Balance Sheet Arrangements
None.
Contractual Obligations
As a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.
Critical Accounting Policies and Estimates
There are no material changes from the critical accounting policies, estimates and new accounting pronouncements set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K filed with the SEC on April 14, 2022. Please refer to that document for disclosures regarding the critical accounting policies related to our business.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.
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Item 4: Controls and Procedures
Disclosure Controls and Procedures
Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of March 31, 2022, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended March 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, GGH and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against GGH and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage. We are not involved in any litigation that we believe is likely, individually or in the aggregate, to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in Item 1A of the Company’s Annual Report on Form 10-K as filed with the SEC on April 14, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On February 3, 2022, the Company purchased the domain name Gaucho.com for $34,999 in cash and 15,000 shares of common stock, subject to adjustment. The seller is entitled to additional shares of common stock if on August 14, 2022, the closing price per share of the Company’s common stock is less than $2.64 as quoted on a national securities exchange, and the Company shall issue additional shares of common stock so that the value of the total shares issued to the seller collectively has a fair market value of $36,900. No general solicitation was used, no commissions were paid, and the Company relied on the exemption from registration available under Section 4(a)(2) of the Securities Act in connection with the issuance of shares of common stock. For more information, please see our Current Report on Form 8-K filed on February 25, 2022 and Item 9B of our Annual Report on Form 10-K filed on April 14, 2022.
Also on February 3, 2022, the Company, through its subsidiaries, acquired 100% of Hollywood Burger Argentina S.R.L. (now Gaucho Development S.R.L.), in exchange for issuing 1,283,423 shares of its common stock to Hollywood Burger Holdings, Inc. No general solicitation was used, no commissions were paid, and the Company relied on the exemption from registration available under Section 4(a)(2) and Rule 506(b) of Regulation D of the Securities Act, in connection with the sales. A Form D was filed with the SEC on February 25, 2022. For more information, please see our Current Report on Form 8-K filed on February 25, 2022 and Item 9B of our Annual Report on Form 10-K filed on April 14, 2022.
On February 28, 2022, the Company, holding 79% of the shares of common stock of Gaucho Group, Inc., a Delaware corporation and private company (“GGI”) offered to purchase up to 5,266,509 shares of common stock of GGI (the “GGI Shares”) in exchange for an aggregate of approximately 1,042,788 shares of common stock of the Company, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Share Exchange and Subscription Agreement. On March 28, 2022, the Company issued in the aggregate 1,042,788 shares of its common stock at a price per share of $2.02 to the minority holders of GGI in exchange for the GGI Shares. The GGI Shares were issued pursuant to an exemption from registration under Section 4(a)(2) and/or Rule 506(b) of the Securities Act of 1933, as amended. No general solicitation was used, no commissions were paid, and the Company relied on the exemption from registration available under Section 4(a)(2) and Rule 506(b) of Regulation D of the Securities Act, in connection with the sales. A Form D was filed with the SEC on April 11, 2022. Please see our Current Report on Form 8-K filed on March 21, 2022, our Current Report on Form 8-K filed on March 30, 2022, and Item 9B of our Annual Report on Form 10-K filed on April 14, 2022 for more information.
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On February 22, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the investors to that certain Securities Purchase Agreement, dated as of November 3, 2021 (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Securities Purchase Agreement”) in order to amend and waive certain provisions of the senior secured convertible notes issued pursuant to the Securities Purchase Agreement (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, each, an “Existing Note” and together with the Securities Purchase Agreement, the “Existing Note Documents”). Pursuant to the Exchange Agreement, the Company and the investors further agreed to exchange (the “Exchange” or the “Transaction”) $100 in aggregate principal amount of each of the Existing Notes (the “Exchange Notes”), on the basis and subject to the terms and conditions set forth in the Exchange Agreement, for warrants (the Warrants”) to purchase up to 700,000 shares of the Company’s common stock (the “Warrant Shares”) at an exercise price of $1.75 (subject to customary adjustment upon subdivision or combination of the common stock). The Exchange Agreement, the Exchange or Transaction, the Exchange Notes, the Warrants, and the Warrant Shares are collectively referred to as the “Exchange Documents. The Exchange Agreement amends and waives the original terms of payment of the Existing Notes and provides for payment of interest only beginning February 7, 2022 and on each of March 7, 2022 and April 7, 2022.
The Warrants are immediately exercisable and may be exercised at any time, and from time to time, on or before the third anniversary of the date of issuance. The Warrant includes a “blocker” provision that, subject to certain exceptions described in the Warrant, prevents the investors from exercising the Warrant to the extent such exercise would result in the Investors together with certain affiliates beneficially owning in excess of 4.99% of the Common Stock outstanding immediately after giving effect to such exercise. The Exchange and issuance of Warrant Shares upon exercise was made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. Please see our Current Report on Form 8-K filed on March 1, 2022 and Item 9B of our Annual Report on Form 10-K filed on April 14, 2022 for more information.
Item 3. Defaults upon Senior Securities
On January 25, 2018, the Company received a bank loan in the amount of $525,000 (the “2018 Loan”), denominated in U.S. dollars. The loan bears interest at 6.75% per annum and is due on January 25, 2023. Principal and interest will be paid in 60 equal monthly installments of $10,311, beginning on February 23, 2018. During 2018, the Company defaulted on certain 2018 Loan payments, and as a result, the 2018 Loan is currently payable upon demand. During the three months ended March, 2022, the Company made an aggregate principal payment of $26,329. As of March 31, 2022, principal of $194,750 is outstanding.
As previously reported on the Company’s Annual Reports on Forms 10-K for the years ending December 31, 2017, 2018, 2019, 2020 and 2021, the Company sold convertible promissory notes in the aggregate principal amount of $2,046,730 (together, the “2017 Notes”). The 2017 Notes matured 90 days from the date of issuance, bore interest at 8% per annum and were convertible into the Company’s common stock at $0.63 per share, which represented a 10% discount to the price used for the sale of the Company’s common stock at the commitment date. In 2021, principal and interest of $1,163,354 and $258,714 were exchanged for common stock and warrants with an aggregate fair value of $1,422,068. As of March 31, 2022, principal of $7,000 and interest of $4,547 outstanding on the 2017 Notes is past due and is payable on demand. The 2017 Notes are no longer convertible.
Item 4. Mine and Safety Disclosure
Not applicable.
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Item 5. Other Information
On January 25, 2022, at the Special Meeting of the Stockholders of the Company, for purposes of complying with the Nasdaq Exchange Cap rule, the stockholders approved the issuance of up to 12,164,213 shares pursuant to the Securities Purchase Agreement. Please see our Current Report on Form 8-K filed on January 25, 2022 for more information.
On May 6, 2021, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Tumim Stone Capital LLC (“Tumim Stone Capital”). Pursuant to the Purchase Agreement, the Company requested draw-downs and issued shares of common stock and received gross proceeds of the following: (i) April 19, 2022, the Company issued 16,917 shares of common stock to Tumim Stone Capital for gross proceeds of $28,185.41; and (ii) on May 11, 2022, the Company issued 39,000 shares of common stock to Tumim Stone Capital for gross proceeds of $39,865. No general solicitation was used, and a commission of 8% of the total gross proceeds was paid to Benchmark Investments, Inc. pursuant to the Underwriting Agreement between the Company and Kingswood Capital Markets, a division of Benchmark Investments, Inc. dated February 16, 2021. The Company relied on the exemptions from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, in connection with the sales. A Form D was filed with the SEC on May 17, 2021.
As previously reported on our Current Report on Form 8-K as filed with the SEC on May 2, 2022, on May 2, 2022, the Company entered into a letter agreement regarding the Convertible Promissory Notes issued on November 3, 2022 (the “Letter Agreement”). The Letter Agreement provides for the reduction in conversion price of the Company’s shares of common stock from $3.50 to $1.25 between May 3, 2022 through May 13, 2022.
On May 12, 2022, the Company and the Holders entered into a conversion agreement (the “Conversion Agreement”) pursuant to which the parties agreed to reduce the Conversion Price to $0.95 and the Holders have committed to converting up to 4.90% of the outstanding shares of common stock of the Company. Please see our Current Report on Form 8-K as filed with the SEC on May 13, 2022 for more information.
Pursuant to the Securities Purchase Agreement, the Exchange Agreement, the Convertible Promissory Notes, the Letter Agreement, the Conversion Agreement, and the related documents thereto (the “Transaction Documents”), investors converted the following amounts of principal of the Convertible Promissory Notes: (i) on May 2, 2022, certain investors converted a total of $234,999 of principal of the Convertible Promissory Notes and the Company issued 174,073 shares of common stock upon conversion; (ii) on May 6, 2022, one of the investors converted a total of $67,500 of principal of the Convertible Promissory Notes and the Company issued 50,000 shares of common stock upon conversion, (iii) on May 11, 2022 certain investors converted a total of $54,999 of principal, interest and fees of the Convertible Promissory Notes and the Company issued 40,740 shares of common stock upon conversion, and (iv) on May 13, 2022, certain investors converted a total of $1,165,099 of principal, interest and fees of the Convertible Promissory Notes and the Company issued 1,226,420 shares of common stock upon conversion, of which 595,165 were previously issued as pre-delivery shares on November 9, 2021. The Company filed a Registration Statement on Form S-1 (File No. 333-261564) registering the resale of up to 12,164,213 shares on December 9, 2021, which was declared effective on January 13, 2022.
Item 6. Exhibits
The following documents are being filed with the Commission as exhibits to this Current Report on Form 10-Q.
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| 1. | Incorporated by reference from the Company’s Registration of Securities Pursuant to Section 12(g) on Form 10 dated May 14, 2014. | |
| 2. | Incorporated by reference from the Company’s Annual Report on Form 10-K, filed on March 31, 2017. | |
| 3. | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q, filed on November 19, 2018. | |
| 4. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 9, 2019. | |
| 5. | Incorporated by reference to the Company’s Amended Registration Statement on Form S-1 filed on January 27, 2020. | |
| 6. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 18, 2021. | |
| 7. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 22, 2021. | |
| 8. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 1, 2020. | |
| 9. | Incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 12, 2021. | |
| 10. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 7, 2021. | |
| 11. | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2021. | |
| 12. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 8, 2021. | |
| 13. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2021. | |
| 14. | Incorporated by reference to the Company’s Current Report on Form 8-K as filed on February 25, 2022. | |
| 15. | Incorporated by reference to the Company’s Current Report on Form 8-K as filed on March 1, 2022. | |
| 16. | Incorporated by reference to the Company’s Current Report on Form 8-K as filed on March 21, 2022. | |
| 17. | Incorporated by reference to the Company’s Annual Report on Form 10-K, filed on April 14, 2022. | |
| 18. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on May 2, 2022. | |
| 19. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on May 13, 2022. | |
| * | Filed herewith | |
| ** | Furnished, not filed herewith |
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: May 16, 2022 | GAUCHO GROUP HOLDINGS, INC. | |
| By: | /s/ Scott L. Mathis | |
| Scott L. Mathis | ||
| Chief Executive Officer | ||
| By: | /s/ Maria Echevarria | |
| Maria Echevarria | ||
| Chief Financial Officer and Chief Operating Officer | ||
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Exhibit 14.3
GAUCHO GROUP HOLDINGS, INC.
COMPENSATION COMMITTEE CHARTER
Adopted by the Board of Directors on December 6, 2017, adopted as amended on March 25, 2021, and adopted on May 12, 2022
A. PURPOSE
The purpose of the Compensation Committee (the “Committee”) is to carry out the responsibilities delegated by the board of directors (the “Board”) of Gaucho Group Holdings, Inc. (the “Company”) relating to the review and determination of executive compensation.
B. MEMBERSHIP
1. Independence. The Committee shall consist of two or more directors. Each Committee member shall be an “independent director” in accordance with NASDAQ Listing Rule 5605(a)(2); provided however, that if the Committee consists of three or more independent members, one director who does not meet the requirements of Rule 5065(d)(2)(A) and is not currently an Executive Officer or employee or Family Member of an Executive Officer may be appointed to the Committee if the Board, under exceptional and limited circumstances, determines that such individual’s membership on the Committee is required by the best interests of the Company and its stockholders. If relying on this exception, the Company must disclose as required by Rule 506(d)(2)(B) the nature of the relationship and the reasons for the determination. Any member appointed under the exception may not serve longer than two years. In affirmatively determining the independence of the directors serving on the Committee, the Board considered all factors relevant to whether the director has a relationship to the Company which is material to his or her ability to be independent from management, including:
| (a) | The source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the Company (or any parent or subsidiary) to the director; | |
| (b) | Whether the director receives compensation from any person or entity that would impair the director’s ability to make independent judgments about the Company’s executive compensation; | |
| (c) | Whether the director is affiliated with the Company (or any parent), any subsidiary of the Company or any affiliate of the company’s subsidiaries, and whether the relationship places the director under the direct or indirect control of the Company or its senior management, or creates a direct relationship between the director and members of senior management, that would impair the director’s ability to make independent judgments about the Company’s executive compensation. |
2. Qualifications. At least two Committee members must qualify as “non-employee directors” for purposes of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and as “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code, as amended.
| Page | 1 | Gaucho Group Holdings, Inc. Compensation Committee Charter |
3. Appointment. Committee members shall be appointed by the Board. The Committee members shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any Committee member at any time with or without cause.
C. DUTIES AND RESPONSIBILITIES
The Committee shall have the following authority and responsibilities:
1. CEO Compensation. To annually approve and review the corporate goals and objectives applicable to the compensation of the chief executive officer (“CEO”), evaluate at least annually the CEO’s performance in light of those goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation. To review and approve, and when appropriate recommend to the Board for approval, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans. The CEO cannot be present during any voting or deliberations by the Committee on his or her compensation.
2. Non-CEO Executive Officer Compensation. To review and make recommendations to the Board regarding the compensation of all other executive officers.
3. Other Compensation Plans. To review and make recommendations to the Board regarding incentive compensation plans and equity-based plans, which includes the ability to adopt, amend and terminate such plans. The Committee shall, where appropriate or required, recommend incentive compensation or equity-based plans for approval by the stockholders of the Company. The Committee shall also have the authority to administer the Company’s incentive compensation plans and equity-based plans, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions applicable to each award or grant, subject to the provisions of each plan.
4. Risk and Compensation. To review the Company’s incentive compensation arrangements to determine whether they encourage excess risk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation, and to evaluate compensation policies and practices that could mitigate any such risk.
5. Stockholder and Other Engagement. To oversee engagement with stockholders and proxy advisory firms on executive compensation matters.
Page | 2 |
D. OUTSIDE ADVISORS
1. Retaining Outside Advisors. The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall set the compensation, and oversee the work, of the compensation consultant. The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of outside legal counsel and such other advisors as it deems necessary to fulfill its duties and responsibilities under this Charter. The Committee shall set the compensation, and oversee the work, of its outside legal counsel and other advisors. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to its compensation consultants, outside legal counsel and any other advisors. However, the Committee shall not be required to implement or act consistently with the advice or recommendations of its compensation consultant, legal counsel or other advisor to the compensation committee, and the authority granted in this Charter shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties under this Charter.
2. Compensation Consultant Independence. The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K and Rule 5605(d)(3) of the NASDAQ Listing Rules.
E. STRUCTURE AND OPERATIONS
1. General. The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at least four times a year at such times and places as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board regarding its actions and make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
2. Participation in Committee Meetings. The Committee may invite such members of management to its meetings as it deems appropriate. However, the Committee shall meet regularly without such members present, and in all cases the CEO and any other such officers shall not be present at meetings in which their compensation or performance is discussed or determined.
3. Annual Review. This Committee shall review this Charter at least annually and recommend any proposed changes to the Board for approval.
4. Performance Evaluation. The Committee shall conduct an annual evaluation of the performance of its duties under this Charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such a manner as it deems appropriate.
Page | 3 |
Exhibit 31.1
CERTIFICATION
PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Scott L. Mathis, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Gaucho Group Holdings, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| May 16, 2022 | /s/ Scott L. Mathis | |
| Name: | Scott L. Mathis | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Maria Echevarria, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Gaucho Group Holdings, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| May 16, 2022 | /s/ Maria Echevarria | |
| Name: | Maria I. Echevarria | |
| Title: | Chief Financial Officer | |
| (Principal Accounting Officer) |
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Gaucho Group Holdings, Inc. (the “Company’s Quarterly Report”) on Form 10-Q for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Scott L. Mathis, as Chief Executive Officer and principal executive officer and Maria I. Echevarria, as Chief Financial Officer and principal financial officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge and belief, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| 2. | Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
| /s/ Scott L. Mathis | |
| Scott L. Mathis | |
| Chief Executive Officer and Principal Executive Officer | |
| Dated: May 16, 2022 | |
| /s/ Maria I. Echevarria | |
| Maria I. Echevarria | |
| Chief Financial Officer and Principal Financial Officer | |
| Dated: May 16, 2022 |
This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||
| Accounts receivable, allowance doubtful accounts | $ 236,330 | $ 229,768 |
| Preferred stock, shares authorized | 11,000,000 | 11,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 150,000,000 | 150,000,000 |
| Common stock, shares issued | 12,235,642 | 9,881,955 |
| Common stock, shares outstanding | 12,232,273 | 9,878,586 |
| Treasury stock, shares | 3,369 | 3,369 |
| Related Party [Member] | ||
| Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||
| Accounts receivable, allowance doubtful accounts | $ 339,503 | $ 339,503 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Income Statement [Abstract] | ||
| Net loss | $ (2,272,101) | $ (1,140,360) |
| Other comprehensive income : | ||
| Foreign currency translation adjustments | 263,406 | 98,980 |
| Comprehensive loss | (2,008,695) | (1,041,380) |
| Comprehensive loss attributable to non-controlling interests | 72,261 | 27,509 |
| Comprehensive loss attributable to controlling interests | $ (1,936,434) | $ (1,013,871) |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Treasury Stock [Member] |
Additional Paid-in Capital [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Gaucho Group Holdings Stockholders Deficiency [Member] |
Noncontrolling Interest [Member] |
Total |
Preferred Stock [Member]
Series B Convertible Redeemable Preferred Stock [Member]
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||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2020 | $ 52,344 | $ (46,355) | $ 96,951,440 | $ (11,932,801) | $ (93,534,828) | $ (8,510,200) | $ (106,798) | $ (8,616,998) | $ 9,010,824 | ||
| Balance, shares at Dec. 31, 2020 | 5,234,406 | 3,369 | 901,070 | ||||||||
| Options and warrants | 101,453 | 101,453 | 67,196 | 168,649 | |||||||
| Net loss | (1,112,851) | (1,112,851) | (27,509) | (1,140,360) | |||||||
| Other comprehensive income | 98,980 | 98,980 | 98,980 | ||||||||
| Common stock and warrants issued for cash, in public offering, net of offering costs [1] | $ 13,333 | 6,589,008 | 6,602,341 | 6,602,341 | |||||||
| Common stock and warrants issued for cash in public offering, net of offering costs [1], shares | [1] | 1,333,334 | |||||||||
| Common stock and warrants issued for cash | $ 732 | 438,268 | 439,000 | 439,000 | |||||||
| Common stock and warrants issued for cash, shares | 73,167 | ||||||||||
| Common stock and warrants issued to underwriter in public offering | 297,963 | 297,963 | 297,963 | ||||||||
| Common stock and warrants issued upon exchange of debt and accrued interest | $ 2,370 | 1,419,698 | 1,422,068 | 1,422,068 | |||||||
| Common stock and warrants issued upon exchange of debt and accrued interest, shares | 237,012 | ||||||||||
| Common stock issued upon conversion of Series B Convertible Preferred Stock | $ 6,007 | 9,004,817 | 9,010,824 | 9,010,824 | $ (9,010,824) | ||||||
| Common stock issued upon conversion of Series B Convertible Preferred Stock, shares | 600,713 | (901,070) | |||||||||
| Effect of reverse stock split | |||||||||||
| Effect of reverse stock split, shares | 495 | ||||||||||
| Balance at Mar. 31, 2021 | $ 74,786 | $ (46,355) | 114,802,647 | (11,833,821) | (94,647,679) | 8,349,578 | (67,111) | 8,282,467 | |||
| Balance, shares at Mar. 31, 2021 | 7,479,127 | 3,369 | |||||||||
| Balance at Dec. 31, 2021 | $ 98,820 | $ (46,355) | 121,543,241 | (11,607,446) | (95,726,534) | 14,261,726 | (169,882) | 14,091,844 | |||
| Balance, shares at Dec. 31, 2021 | 9,881,955 | 3,369 | |||||||||
| Options and warrants | 72,700 | 72,700 | 10,354 | 83,054 | |||||||
| 401(k) | $ 125 | 27,696 | 27,821 | $ 27,821 | |||||||
| 401 (k), shares | 12,476 | 12,476 | |||||||||
| Common stock issued for purchase of minority interest | $ 10,427 | (242,216) | (231,789) | 231,789 | |||||||
| Common stock issued for purchase of minority interest, shares | 1,042,788 | ||||||||||
| Common stock issued for acquisition of GDS | $ 12,834 | 2,181,819 | 2,194,653 | 2,194,653 | |||||||
| Common stock issued for acquisition of GDS, Shares | 1,283,423 | ||||||||||
| Common stock issued for purchase of domain name | $ 150 | 39,450 | 39,600 | 39,600 | |||||||
| Common stock issued for purchase of domain name, shares | 15,000 | ||||||||||
| Warrants issued for modification of convertible debt principal | 731,856 | 731,856 | 731,856 | ||||||||
| Net loss | (2,199,840) | (2,199,840) | (72,261) | (2,272,101) | |||||||
| Other comprehensive income | 263,406 | 263,406 | 263,406 | ||||||||
| Balance at Mar. 31, 2022 | $ 122,356 | $ (46,355) | $ 124,354,546 | $ (11,344,040) | $ (97,926,374) | $ 15,160,133 | $ 15,160,133 | ||||
| Balance, shares at Mar. 31, 2022 | 12,235,642 | 3,369 | |||||||||
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Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) |
3 Months Ended |
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Mar. 31, 2022
USD ($)
| |
| Subsidiary, Sale of Stock [Line Items] | |
| Offering cost | $ 1,399,663 |
| Offering cost, cash | 1,034,684 |
| Offering cost, non cash | 364,979 |
| Underwriter [Member] | |
| Subsidiary, Sale of Stock [Line Items] | |
| Gross proceeds from public offering | $ 8,002,004 |
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Statement of Cash Flows [Abstract] | |
| Gross proceeds from underwritten public offering | $ 8,002,004 |
| Offering cost on underwritten public offering | $ 715,000 |
BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES |
3 Months Ended |
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Mar. 31, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES | 1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES
Organization and Operations
Through its subsidiaries, Gaucho Group Holdings, Inc. (“Company”, “GGH”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops, and operates a collection of luxury assets, including real estate development, fine wines, and a boutique hotel in Argentina, as well as an e-commerce platform for the sale of high-end fashion and accessories.
As wholly owned subsidiaries of GGH, InvestProperty Group, LLC (“IPG”) and Algodon Global Properties, LLC (“AGP”) operate as holding companies that invest in, develop and operate global real estate and other lifestyle businesses such as wine production and distribution, golf, tennis, and restaurants.
GGH operates its properties through its ALGODON® brand. IPG and AGP have invested in two ALGODON® brand projects located in Argentina. The first project is Algodon Mansion, a Buenos Aires-based luxury boutique hotel property that opened in 2010 and is owned by the Company’s subsidiary, The Algodon – Recoleta, SRL (“TAR”). The second project is the redevelopment, expansion and repositioning of a Mendoza-based winery and golf resort property now called Algodon Wine Estates (“AWE”), the integration of adjoining wine producing properties, and the subdivision of a portion of this property for residential development. On February 3, 2022, the Company acquired additional real estate through the acquisition of 100% ownership in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L. (“GDS”).
GGH also manufactures, distributes, and sells high-end luxury fashion and accessories through its subsidiary, Gaucho Group, Inc. (“GGI”). GGH held a 79% ownership interest in GGI through March 28, 2022, at which time GGH acquired the remaining 21% ownership interest in GGI. See Non-Controlling Interest, below.
On June 14, 2021, the Company formed a wholly-owned subsidiary, Gaucho Ventures I – Las Vegas, LLC (“GVI”), and on June 17, 2021, Gaucho Group Holdings, Inc announced the signing of an agreement between GVI and LVH Holdings LLC (“LVH”) to develop a project in Las Vegas, Nevada. As of March 31, 2022, the Company had contributed total capital of $7.0 million to LVH and received 396 limited liability company interests, representing an 11.9% equity interest in LVH.
Non-Controlling interest
As a result of the 2019 conversion of certain convertible debt into shares of Gaucho Group, Inc. (“GGI”) common stock, GGI investors obtained a 21% ownership interest in GGI, which was recorded as a non-controlling interest. The profits and losses of GGI for the three months ended March 31, 2021 and for the period from January 1, 2022 through March 28, 2022 are allocated between the controlling interest and the non-controlling interest in the same proportions as their membership interest. On March 28, 2022, the Company issued shares of its common stock to the minority holders of GGI, in exchange for the remaining 21% ownership of GGI, such that as of March 31, 2022, the Company owns 100% of the outstanding common stock of GGI.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Risks and Uncertainties
In December 2019, the 2019 novel coronavirus (“COVID-19”) surfaced in Wuhan, China. The World Health Organization declared the outbreak as a global pandemic in March 2020. resulting in the temporarily closure of our corporate office, and the temporary suspension of our hotel, restaurant, winery operations, golf and tennis operations, and our real estate development operations. Further, some outsourced factories from which Gaucho ordered products had closed, borders for importing product had been impacted and the Gaucho fulfillment center was also closed for several weeks. In response, the Company reduced its costs by negotiating out of its New York lease, renegotiating with vendors, and implementing salary reductions. The Company also created an e-commerce platform for our wine sales in response to the pandemic. As of the date of this report, The Company has resumed real estate development operations and has re-opened its winery and golf and tennis facilities, as well as its hotels.
The Company is continuing to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on the Company’s operations, financial position and cash flows, as well as the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company’s future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2022 and for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on April 14, 2022.
Liquidity
As of March 31, 2022, the Company had cash and a working capital deficit of $977,611 and $2,788,934, respectively. During the three months ended March 31, 2022 and 2021, the Company incurred a net loss of $2,272,101 and $1,140,360, respectively, and used cash in operating activities of $2,099,246 and $2,075,085, respectively.
The Company expects that its cash on hand, plus additional cash from the sales of common stock under the Purchase Agreement (see Note 15 –Stockholders’ Equity) will fund its operations for at least 12 months after the issuance date of these financial statements.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.
Highly Inflationary Status in Argentina
The Company recorded gains on foreign currency transactions of $182,922 and $19,003 during the three months ended March 31, 2022 and 2021 respectively, as a result of the net monetary liability position of its Argentine subsidiaries.
Concentrations
The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $377,153 at March 31, 2022, of which $237,467 represents cash held in Argentine bank accounts.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets.
The Company earns revenues from the sale of real estate lots, as well as hospitality, food & beverage, other related services, and from the sale of clothing and accessories. The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:
Revenue from the sale of food, wine, agricultural products, clothes and accessories is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered, and the performance obligation has been satisfied. Revenues from gift card sales are recognized when the card is redeemed by the customer. The Company does not adjust revenue for the portion of gift card values that is not expected to be redeemed (“breakage”) due to the lack of historical data. Revenue from real estate lot sales is recorded when the lot is deeded, and legal ownership of the lot is transferred to the customer.
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Deferred revenues associated with real estate lot sale deposits are recognized as revenues (along with any outstanding balance) when the lot sale closes, and the deed is provided to the purchaser. Other deferred revenues primarily consist of deposits accepted by the Company in connection with agreements to sell barrels of wine, advance deposits received for grapes and other agricultural products, and hotel deposits. Wine barrel and agricultural product advance deposits are recognized as revenues (along with any outstanding balance) when the product is shipped to the purchaser. Hotel deposits are recognized as revenue upon occupancy of rooms, or the provision of services.
Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.
As of March 31, 2022 and December 31, 2021, the Company had deferred revenue of $681,984 and $622,453, respectively, associated with real estate lot sale deposits, $71,891 and $91,163, respectively, related to hotel deposits and $6,025 and $0, respectively, related to a leased property (See Note 9 – Deferred Revenue). Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Basic loss per common share is computed by dividing net loss attributable to GGH common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments.
Recently Adopted Accounting Pronouncements
On May 3, 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its condensed consolidated financial statements.
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ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L |
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| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L | 3. ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L.
On February 3, 2022, the Company, through its subsidiaries, acquired 100% of Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L., (“GDS”) in exchange for issuing shares of its common stock, valued at $2,194,653 at date of issuance, to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management and ownership.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The acquisition was accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired was represented by a group of similar assets. The total purchase consideration of $2,204,908 (including $10,255 of legal fees incurred in connection with the acquisition) was allocated to the assets and liabilities acquired as follows (subject to adjustment):
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INVENTORY |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY | 4. INVENTORY
Inventory at March 31, 2022 and December 31, 2021 was comprised of the following:
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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PROPERTY AND EQUIPMENT |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Depreciation and amortization of property and equipment was $45,636 and $36,930 during the three months ended March 31, 2022 and 2021, respectively.
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INTANGIBLE ASSETS |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS
On February 3, 2022, the Company purchased the domain name Gaucho.com, in exchange cash consideration of $34,999 and shares of common stock valued at $39,600 (see Note 15 – Stockholders’ Equity, Common Stock). The domain name is being amortized over its useful life of 15 years.
The Company recognized $583 of amortization expense during the three months ended March 31, 2022, related to the domain name. Future amortization of the Company’s intangible asset is as follows:
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
3 Months Ended |
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Mar. 31, 2022 | |
| Fair Value Disclosures [Abstract] | |
| FAIR VALUE OF FINANCIAL INSTRUMENTS | 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or developed by the Company. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1 - Valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include actively traded equity securities.
Level 2 - Valued based on (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) from market corroborated inputs. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted.
Level 3 - Valued based on valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments, and certain commitments and guarantees.
The carrying amounts of the Company’s short-term financial instruments including cash, accounts receivable, advances and loans to employees, prepaid taxes and expenses, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the Company’s loans payable, debt obligations and convertible debt obligations approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities.
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ACCRUED EXPENSES |
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| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES | 8. ACCRUED EXPENSES
Accrued expenses are comprised of the following:
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
On November 27, 2020, the Company entered into various payment plans, pursuant to which it agreed to pay its Argentine payroll tax obligations over a period of 60 to 120 months. The current portion of payments due under the plan is $219,852 and $157,532 as of March 31, 2022 and December 31, 2021, respectively, which is included in accrued taxes payable – Argentina, above. The non-current portion of accrued expenses represents payments under the plan that are scheduled to be paid after twelve months. The Company incurred interest expense of $4,487 and $2,728 during the three months ended March 31, 2022 and 2021, respectively, related to these payment plans.
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DEFERRED REVENUE |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEFERRED REVENUE | 9. DEFERRED REVENUE
Deferred revenue is comprised of the following:
The Company accepts deposits in conjunction with agreements to sell real estate building lots at Algodon Wine Estates in the Mendoza wine region of Argentina. These lot sale deposits are generally denominated in U.S. dollars. The Company executed new agreements for the sale of one additional lot during the three months ended March 31, 2022 and recorded deferred revenues in the amount of $64,990. This increase in deferred revenues is partially offset by the impact of the change in exchange rates during the period. Revenue is recorded when the sale closes, and the deeds are issued.
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LOANS PAYABLE |
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| Loans Payable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LOANS PAYABLE | 10. LOANS PAYABLE
The Company’s loans payable are summarized below:
During the three months ended March 31, 2022, the Company made principal payments in the amount of $26,329 on the 2018 Loan payable.
The Company incurred interest expense related to the loans payable in the amount of $4,273 and $5,968 during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and December 31, 2021, there is accrued interest of $7,668 and $6,787, respectively, related to the Company’s loans payable.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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CONVERTIBLE DEBT OBLIGATIONS |
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| Convertible Debt Obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE DEBT OBLIGATIONS | 11. CONVERTIBLE DEBT OBLIGATIONS
Amounts owed pursuant to the Company’s convertible debt obligations are as follows:
On November 3, 2021, the Company sold senior secured convertible notes of the Company, in the aggregate original principal amount of $6,480,000 (the “GGH Notes”), for gross proceeds of $6,000,000. The GGH Notes are due and payable on the first anniversary of the issuance date (the “Maturity Date”), bear interest at 7% per annum and are convertible into shares of common stock of the Company at a conversion price of $3.50 (subject to adjustment for standard anti-dilution events). Pursuant to the original terms of the GGH Notes, beginning on February 7, 2022, the Company was to make nine monthly payments consisting of principal in the amount of $720,000, plus (i) accrued interest and (ii) a make-whole amount equal to the additional interest that would accrue if the entire GGH Notes principal remained outstanding through the Maturity Date. Holders of GGH Notes may convert any portion of outstanding and unpaid principal and interest at any time, subject to a 4.99% beneficial ownership limitation.
On February 22, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with holders of GGH Notes. Pursuant to the Exchange Agreement, the Company is able to defer monthly principal payments until May 7, 2022 and will make six monthly payments in the amount of $1,080,000, plus accrued interest and make-whole amount. As consideration for entering into the Exchange Agreement, $300 of aggregate principal amount the GGH Notes was exchanged for three-year warrants (the GGH Warrants”) for the purchase of an aggregate of 750,000 shares of the Company’s common stock at an exercise price of $1.75 per share, which had an aggregate grant date value of $731,556. The Exchange Agreement was accounted for as a debt modification and the grant date value of the GGH Warrants was recorded as additional debt discount. See Note 18 – Subsequent Events, Convertible Debt Amendment for additional information.
The GGH Notes include several embedded features that require bifurcation. However, management has determined that the value of these bifurcated derivatives is de minimis as of November 3, 2021 (date of the agreement), December 31, 2021 and March 31, 2022.
The GGH Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries and are secured by all existing and future assets of the Company, as well as shares of common stock and certain options to purchase common stock of the Company owned by the President and CEO of the Company.
Holders of GGH Notes are entitled to certain registration rights, pursuant to a registration rights agreement between the holders of the GGH Notes and the Company, dated November 9, 2021.
Upon the issuance of the GGH Notes, the Company recorded a debt discount at issuance in the aggregate amount $950,813, consisting of (i) the $480,000 difference between the aggregate principal amount of the GGH Notes and the cash proceeds received, and (ii) financing costs in the aggregate amount of $446,813. The debt discount is being amortized using the effective interest method over the term of the GGH Notes.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The Company incurred total interest expense of $749,229 related to the Convertible Notes during the three months ended March 31, 2022, including (i) $113,396 interest accrued at 7% per annum; (ii) the make-whole amount of $84,393, and (iii) amortization of debt discount in the amount of $551,440. During the three months ended March 31, 2022, the Company paid interest in the amount of $100,800, such that interest accrued on the GGH Notes is $162,509 and $65,520 as of March 31, 2022 and December 31, 2021, respectively.
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SEGMENT DATA |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT DATA | 12. SEGMENT DATA
The Company’s financial position and results of operations are classified into three reportable segments, consistent with how the CODM makes decisions about resource allocation and assesses the Company’s performance.
The Company has recast its financial information and disclosures for the prior period to reflect the segment disclosures as if the current presentation had been in effect throughout all periods presented. The following tables present segment information for the three months ended March 31, 2022 and 2021:
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The following tables present segment information as of March 31, 2022 and December 31, 2021:
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RELATED PARTY TRANSACTIONS |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS
Assets
Accounts receivable – related parties of $1,071,876 and $927,874 at March 31, 2022 and December 31, 2021, respectively, represent the net realizable value of advances made to separate entities under common management.
Expense Sharing
On April 1, 2010, the Company entered into an agreement with a Related Party to share expenses such as office space, support staff, professional services, and other operating expenses (the “Related Party ESA”). During the three months ended March 31, 2022 and 2021, the Company recorded a contra-expense of $228,226 and $93,021, respectively, related to the reimbursement of general and administrative expenses as a result of the agreement.
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BENEFIT CONTRIBUTION PLAN |
3 Months Ended |
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Mar. 31, 2022 | |
| Retirement Benefits [Abstract] | |
| BENEFIT CONTRIBUTION PLAN | 14. BENEFIT CONTRIBUTION PLAN
The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction.
A participant is always fully vested in their account, including the Company’s contribution. For the three months ended March 31, 2022 and 2021, the Company recorded a charge associated with its contribution of $18,976 and $16,462, respectively. This charge has been included as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company issues shares of its common stock to settle these obligations based on the fair value of its common stock on the date the shares are issued. During the three months ended March 31, 2022, the Company issued shares at $ per share in satisfaction of $27,821 of 401(k) contribution liabilities.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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STOCKHOLDERS’ EQUITY |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | 15. STOCKHOLDERS’ EQUITY
Common Stock
On February 3, 2022, the Company issued shares of common stock and paid $34,999 cash as consideration for the purchase of the domain name Gaucho.com. The seller is entitled to additional shares if the closing price per share is less than $ on August 14, 2022, such that the collective value of the total shares issued to the seller has a fair market value of $36,900.
On February 3, 2022, the Company issued shares of its common stock, valued at $2,194,653, to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management, in exchange for a 100% ownership interest in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L., The purpose of the acquisition was to acquire certain real property held by Gaucho Development S.R.L. (see Note 3 – Acquisition of Hollywood Burger Argentina, S.R.L.)
On March 28, 2022, the Company issued shares of its common stock, valued at $2,419,268, to the minority holders of GGI, in exchange for the remaining 21% non-controlling interest in GGI. The acquisition of the remaining shares of GGI resulted in a decrease of non-controlling interest to zero, and an adjustment to additional paid-in capital to reflect the Company’s increased ownership in GGI.
Accumulated Other Comprehensive Loss
For three months ended March 31, 2022 and 2021, the Company recorded a gain of $263,406 and $98,980, respectively, of foreign currency translation adjustments as accumulated other comprehensive income, primarily related to fluctuations in the Argentine peso to United States dollar exchange rates (see Note 2 – Summary of Significant Accounting Policies, Highly Inflationary Status in Argentina).
Warrants
A summary of warrant activity during the three months ended March 31, 2022 is presented below:
See Note 11 – Convertible Debt Obligations for details regarding warrants issued during the three months ended March 31, 2022.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Stock Options
No stock options were granted during the three months ended March 31, 2022 or the three months ended March 31, 2021. The following table presents information related to GGH stock options outstanding as of March 31, 2022:
During the three months ended March 31, 2022 and 2021, the Company recorded stock-based compensation expense of $ and $, respectively, related to stock options for the purchase of GGH common stock, which is reflected as general and administrative expenses (classified in the same manner as the grantees’ wage compensation) in the accompanying condensed consolidated statements of operations. As of March 31, 2022, there was $ of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of years.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Gaucho Group, Inc. Stock Options
As of March 31, 2022, options to purchase 5,502,500 shares of GGI common stock are outstanding under the 2018 Gaucho Plan (the “GGI Stock Options”). The options are exercisable at $ per share of GGI common stock and expire on December 18, 2023. During the three months ended March 31, 2022 and 2021, the Company recorded stock-based compensation expense of $ and $, respectively, related to stock options for the purchase of GGI common stock As of March 31, 2022, there is $ unrecognized stock-based compensation expense related to the GGI Stock Options that will be recognized through December 31, 2022.
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. After consulting legal counsel, the Company does not believe that the outcome of any such pending or threatened litigation will have a material adverse effect on its financial condition or results of operations. However, as is inherent in legal proceedings, there is a risk that an unpredictable decision adverse to the Company could be reached. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable.
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LEASES |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | 17. LEASES
On April 8, 2021, GGI entered into a lease agreement to lease a retail space in Miami, Florida for 7 years, which expires May 1, 2028. As of March 31, 2022, the lease had a remaining term of approximately 6.1 years. Lease payments begin at $26,758 per month and escalate 3% every year over the duration of the lease. The Company was granted rent abatements of 15% for the first year of the lease term, and 10% for the second and third year of the lease term. The Company was required to pay a $56,130 security deposit.
As of March 31, 2022, the Company had no leases that were classified as a financing lease. There were no operating leases in effect during the three months ended March 31, 2021.
Total operating lease expenses were $82,965 and $0 during the three months ended March 31, 2022 and 2021, respectively. Lease expenses are recorded in general and administrative expenses on the accompanying condensed consolidated statements of operations.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Supplemental cash flow information related to leases was as follows:
Future minimum lease commitments are as follows:
The Company is the lessor of a building and land that it purchased in connection with acquisition of GDS, pursuant to an operating lease which expires on August 31, 2031. At the end of the leases, the lessee may enter into a new lease or return the asset, which would be available to the Company for releasing. The Company recorded lease revenue of $3,745 and $0 during the three months ended March 31, 2022 and 2021, respectively, related to this lease agreement.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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SUBSEQUENT EVENTS |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | 18. SUBSEQUENT EVENTS
Convertible Debt Amendment and Conversion
On May 2, 2022, the Company entered into a letter agreement with the holders of GGH Notes (the “Letter Agreement”). The Letter Agreement provides for the reduction of the conversion price for shares of the Company’s common stock from $to $between May 3, 2022 through May 13, 2022. Further, On May 12, 2022, the Company entered into a conversion agreement with the holders of GGH Notes (the “Conversion Agreement”) pursuant to which the parties agreed to reduce the Conversion Price to $ and the holders of GGH Notes have committed to converting up to 4.90% of the outstanding shares of common stock of the Company.
During the period from May 2, 2022 through May 11, 2022, principal, interest and fees in the amount of $357,498 was converted into shares of common stock at a conversion price of $1.35 per share. On May 13, 2022 principal, interest and fees in the amount of $1,165,099 was converted into shares of common stock at conversion price of $0.95 per share, of which shares were issued as pre-delivery shares on November 9, 2022 and the remaining shares were issued on May 13, 2022.
Common Stock Issued
From April 19, 2022 through May 11, 2022, , the Company sold shares of the Company’s common stock to for aggregate gross proceeds of $68,050 less cash offering costs of $5,444.
Foreign Currency Exchange Rates
The Argentine Peso to United States Dollar exchange rate was 117.3984, 110.9297 and 102.6834 at May 14, March 31, 2022, and December 31, 2021, respectively.
The British pound to United States dollar exchange rate was 0.8154, 0.7613 and 0.7340 at May 14, March 31, 2022, and December 31, 2021, respectively. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2022 and for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on April 14, 2022.
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| Liquidity | Liquidity
As of March 31, 2022, the Company had cash and a working capital deficit of $977,611 and $2,788,934, respectively. During the three months ended March 31, 2022 and 2021, the Company incurred a net loss of $2,272,101 and $1,140,360, respectively, and used cash in operating activities of $2,099,246 and $2,075,085, respectively.
The Company expects that its cash on hand, plus additional cash from the sales of common stock under the Purchase Agreement (see Note 15 –Stockholders’ Equity) will fund its operations for at least 12 months after the issuance date of these financial statements.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.
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| Highly Inflationary Status in Argentina | Highly Inflationary Status in Argentina
The Company recorded gains on foreign currency transactions of $182,922 and $19,003 during the three months ended March 31, 2022 and 2021 respectively, as a result of the net monetary liability position of its Argentine subsidiaries.
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| Concentrations | Concentrations
The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $377,153 at March 31, 2022, of which $237,467 represents cash held in Argentine bank accounts.
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| Revenue Recognition | Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets.
The Company earns revenues from the sale of real estate lots, as well as hospitality, food & beverage, other related services, and from the sale of clothing and accessories. The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:
Revenue from the sale of food, wine, agricultural products, clothes and accessories is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered, and the performance obligation has been satisfied. Revenues from gift card sales are recognized when the card is redeemed by the customer. The Company does not adjust revenue for the portion of gift card values that is not expected to be redeemed (“breakage”) due to the lack of historical data. Revenue from real estate lot sales is recorded when the lot is deeded, and legal ownership of the lot is transferred to the customer.
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Deferred revenues associated with real estate lot sale deposits are recognized as revenues (along with any outstanding balance) when the lot sale closes, and the deed is provided to the purchaser. Other deferred revenues primarily consist of deposits accepted by the Company in connection with agreements to sell barrels of wine, advance deposits received for grapes and other agricultural products, and hotel deposits. Wine barrel and agricultural product advance deposits are recognized as revenues (along with any outstanding balance) when the product is shipped to the purchaser. Hotel deposits are recognized as revenue upon occupancy of rooms, or the provision of services.
Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.
As of March 31, 2022 and December 31, 2021, the Company had deferred revenue of $681,984 and $622,453, respectively, associated with real estate lot sale deposits, $71,891 and $91,163, respectively, related to hotel deposits and $6,025 and $0, respectively, related to a leased property (See Note 9 – Deferred Revenue). Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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| Net Loss per Common Share |
Basic loss per common share is computed by dividing net loss attributable to GGH common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments.
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| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements
On May 3, 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2022 and it did not have a material effect on its condensed consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF DISAGGREGATION OF REVENUE | The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:
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| SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE |
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ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ASSETS AND LIABILITIES ACQUIRED |
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INVENTORY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVENTORY | Inventory at March 31, 2022 and December 31, 2021 was comprised of the following:
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PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PROPERTY AND EQUIPMENT | Property and equipment consist of the following:
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INTANGIBLE ASSETS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INTANGIBLE ASSETS FUTURE AMORTIZATION |
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ACCRUED EXPENSES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCRUED EXPENSES | Accrued expenses are comprised of the following:
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DEFERRED REVENUE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF DEFERRED REVENUES | Deferred revenue is comprised of the following:
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LOANS PAYABLE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Payable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LOANS PAYABLE | The Company’s loans payable are summarized below:
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CONVERTIBLE DEBT OBLIGATIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Debt Obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CONVERTIBLE NOTES | Amounts owed pursuant to the Company’s convertible debt obligations are as follows:
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SEGMENT DATA (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SEGMENT INFORMATION |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The following tables present segment information as of March 31, 2022 and December 31, 2021:
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STOCKHOLDERS’ EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF WARRANTS ACTIVITY | A summary of warrant activity during the three months ended March 31, 2022 is presented below:
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| SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE |
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| SCHEDULE OF STOCK OPTION OUTSTANDING AND EXERCISABLE |
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES | Supplemental cash flow information related to leases was as follows:
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| SCHEDULE OF FUTURE MINIMUM LEASE COMMITMENT | Future minimum lease commitments are as follows:
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BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES (Details Narrative) - USD ($) $ in Millions |
Mar. 28, 2022 |
Mar. 31, 2022 |
Feb. 03, 2022 |
|---|---|---|---|
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
| Ownership percentage | 21.00% | 79.00% | |
| Cash to related party investment | $ 7.0 | ||
| Stock Issued During Period, Shares, New Issues | 1,042,788 | ||
| Gaucho Group, Inc [Member] | |||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
| Ownership percentage | 100.00% | ||
| Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 21.00% | ||
| Gaucho Group, Inc [Member] | LVH Holdings LLC [Member] | |||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
| Ownership percentage | 11.90% |
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Product Information [Line Items] | ||
| Total revenues | $ 425,597 | $ 275,039 |
| Real Estate [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 184,658 | |
| Hotel Rooms and Events [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 139,099 | 105,179 |
| Restaurants [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 17,270 | 128,018 |
| Winemaking [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 26,809 | 18,665 |
| Agricultural [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 27,498 | |
| Golf Tennis and Other [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | 25,101 | 16,618 |
| Clothes and Accessories [Member] | ||
| Product Information [Line Items] | ||
| Total revenues | $ 5,162 | $ 6,559 |
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potentially dilutive shares | 4,483,053 | 3,426,103 |
| Share-Based Payment Arrangement, Option [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potentially dilutive shares | 561,027 | 601,263 |
| Warrant [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potentially dilutive shares | 2,024,166 | 2,824,840 |
| Convertible Debt Securities [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total potentially dilutive shares | 1,897,860 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Defined Benefit Plan Disclosure [Line Items] | |||
| Cash | $ 977,611 | $ 3,649,407 | |
| [custom:WorkingCapitalDeficit-0] | 2,788,934 | ||
| Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 2,272,101 | $ 1,140,360 | |
| Net Cash Provided by (Used in) Operating Activities | 2,099,246 | 2,075,085 | |
| Gain on foreign currency translation | 182,922 | $ 19,003 | |
| Cash, FDIC insured amount | 250,000 | ||
| Cash uninsured amount | 377,153 | ||
| Hotel [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Deferred revenue | 71,891 | 91,163 | |
| Leased Property [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Deferred revenue | 6,025 | 0 | |
| Real Estate Lot Sales Deposit [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Deferred revenue | 681,984 | $ 622,453 | |
| Argentine Bank [Member] | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Cash, FDIC insured amount | $ 237,467 | ||
SCHEDULE OF ASSETS AND LIABILITIES ACQUIRED (Details) |
Mar. 31, 2022
USD ($)
|
|---|---|
| Business Combination and Asset Acquisition [Abstract] | |
| Land | $ 1,528,134 |
| Building | 635,302 |
| Cash | 2,694 |
| Prepaid expenses | 674 |
| Deferred tax credits | 63,282 |
| Accounts payable | (313) |
| Accrued taxes payable | (8,154) |
| Related Party Payable (AWE & TAR) | (10,686) |
| Lease Deposit Payable | (6,025) |
| Total | $ 2,204,908 |
ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Feb. 03, 2022 |
Mar. 31, 2022 |
|
| Business Acquisition [Line Items] | ||
| Purchase consideration | $ 2,204,908 | |
| Legal fees | $ 10,255 | |
| Hollywood Burger Argentina SRL [Member] | ||
| Business Acquisition [Line Items] | ||
| Business acquisition percentage | 100.00% | |
| Common stock shares issued for acquisition | 1,283,423 |
SCHEDULE OF INVENTORY (Details) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Vineyard in process | $ 755,065 | $ 597,900 |
| Wine in process | 457,278 | 410,755 |
| Finished wine | 14,519 | 34,522 |
| Clothes and accessories | 158,180 | 208,759 |
| Clothes and accessories in process | 130,246 | 127,154 |
| Other | 93,970 | 111,549 |
| Total | $ 1,609,257 | $ 1,490,639 |
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Buildings and improvements | $ 3,791,687 | $ 2,869,300 |
| Real estate development | 236,563 | 210,322 |
| Land | 2,193,404 | 575,233 |
| Furniture and fixtures | 403,560 | 403,560 |
| Vineyards | 219,766 | 219,766 |
| Machinery and equipment | 731,538 | 693,761 |
| Leasehold improvements | 756,028 | 449,401 |
| Computer hardware and software | 264,851 | 245,978 |
| Property and equipment, gross | 8,597,397 | 5,667,321 |
| Less: Accumulated depreciation and amortization | (1,935,588) | (1,890,380) |
| Property and equipment, net | $ 6,661,809 | $ 3,776,941 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation and amortization of property and equipment | $ 45,636 | $ 36,930 |
SCHEDULE OF INTANGIBLE ASSETS FUTURE AMORTIZATION (Details) |
Mar. 31, 2022
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| April 1 through December 31, 2022 | $ 3,975 |
| 2023 | 4,973 |
| 2024 | 4,973 |
| 2025 | 4,973 |
| 2026 | 4,973 |
| 2027 | 4,973 |
| Thereafter | 45,176 |
| Total | $ 74,016 |
INTANGIBLE ASSETS (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 28, 2022 |
Feb. 03, 2022 |
Feb. 03, 2022 |
Mar. 31, 2022 |
|
| Finite-Lived Intangible Assets [Line Items] | ||||
| Cash consideration | $ 34,999 | |||
| Shares of common stock issued | 1,042,788 | |||
| Shares of common stock issued, value | $ 39,600 | |||
| Amortization expense | $ 583 | |||
| Internet Domain Names [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Shares of common stock issued | 15,000 | |||
| Shares of common stock issued, value | $ 39,600 | |||
| Useful life | 15 years | |||
SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued compensation and payroll taxes | $ 129,738 | $ 216,916 |
| Accrued taxes payable - Argentina | 298,096 | 228,338 |
| Accrued interest | 174,722 | 76,852 |
| Accrued placement agent commissions | 66,889 | |
| Other accrued expenses | 204,877 | 376,416 |
| Accrued expenses, current | 807,433 | 965,411 |
| Accrued payroll tax obligations, non-current | 121,064 | 115,346 |
| Total accrued expenses | $ 928,497 | $ 1,080,757 |
ACCRUED EXPENSES (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Nov. 27, 2020 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Accrued payroll taxes, current | $ 129,738 | $ 216,916 | ||
| Interest expenses | 754,220 | $ 5,979 | ||
| ARGENTINA | ||||
| Accrued payroll taxes, current | 219,852 | $ 157,532 | ||
| Interest expenses | $ 4,487 | $ 2,728 | ||
| Minimum [Member] | ||||
| Employee tax obligations, term | 60 months | |||
| Maximum [Member] | ||||
| Employee tax obligations, term | 120 months | |||
SCHEDULE OF DEFERRED REVENUES (Details) - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Disaggregation of Revenue [Line Items] | ||
| Total | $ 759,900 | $ 713,616 |
| Real Estate [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 681,984 | 622,453 |
| Other Deferred Revenue [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 71,891 | 91,163 |
| Leased Property Deposit [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | $ 6,025 |
DEFERRED REVENUE (Details Narrative) |
Mar. 31, 2022
USD ($)
|
|---|---|
| Revenue from Contract with Customer [Abstract] | |
| Deferred revenue | $ 64,990 |
SCHEDULE OF LOANS PAYABLE (Details) - Loans Payable [Member] - USD ($) |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Total loans payable | $ 289,740 | $ 317,356 |
| Less: current portion | 196,995 | 223,356 |
| Loans payable, non-current | 92,745 | 94,000 |
| Economic Injury Disaster Loan [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total loans payable | 94,000 | 94,000 |
| 2018 Loan [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total loans payable | $ 195,740 | $ 223,356 |
LOANS PAYABLE (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Short-Term Debt [Line Items] | |||
| Principal payments of loans | $ 26,329 | ||
| Accrued interest | 7,668 | $ 6,787 | |
| Demand Loan [Member] | |||
| Short-Term Debt [Line Items] | |||
| Interest expense | $ 4,273 | $ 5,968 | |
SCHEDULE OF CONVERTIBLE NOTES (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Convertible Debt Obligations | |
| Principal, beginning balance | $ 6,480,000 |
| Debt Discount, beginning balance | (751,652) |
| Convertible debt net of discount, beginning balance | 5,728,348 |
| Principal, Debt principal exchanged for warrants, Principal | (300) |
| Debt Discount, Debt principal exchanged for warrants | (731,556) |
| Convertible debt net of discount, debt principal exchanged for warrants | (731,856) |
| Principal, Amortization of debt discount | |
| Debt Discount, Amortization of debt discount | 551,440 |
| Convertible debt net of discount, Amortization of debt discount | 551,440 |
| Principal, ending balance | 6,479,700 |
| Debt Discount, ending balance | (931,768) |
| Convertible debt net of discount, ending balance | $ 5,547,932 |
CONVERTIBLE DEBT OBLIGATIONS (Details Narrative) - USD ($) |
3 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Feb. 22, 2022 |
Feb. 07, 2022 |
Nov. 03, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 28, 2022 |
Feb. 03, 2022 |
Dec. 31, 2021 |
|
| Short-Term Debt [Line Items] | ||||||||
| Principal amount | $ 6,479,700 | $ 6,480,000 | ||||||
| Ownership percentage | 21.00% | 79.00% | ||||||
| Interest expense | 754,220 | $ 5,979 | ||||||
| Accrued interest | 174,722 | 76,852 | ||||||
| Amortization of debt discount | 551,441 | |||||||
| Exchange Agreement [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Principal amount | $ 300 | |||||||
| Periodic payment on debt | $ 1,080,000 | |||||||
| Warrant purchase | 750,000 | |||||||
| Warrant exercise price | $ 1.75 | |||||||
| Grant date fair value | $ 731,556 | |||||||
| GGH Convertible Notes Payable [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Principal amount | $ 6,480,000 | |||||||
| Proceeds from issuance of debt | $ 6,000,000 | |||||||
| Debt instrument, interest rate | 7.00% | |||||||
| Debt instrument, conversion price | $ 3.50 | |||||||
| Periodic payment on debt | $ 720,000 | |||||||
| Ownership percentage | 4.99% | |||||||
| Debt discount | 950,813 | |||||||
| Debt instrument discount current | 480,000 | |||||||
| Debt issuance cost | 446,813 | |||||||
| Accrued interest | 162,509 | $ 65,520 | ||||||
| Interest expense other | 84,393 | |||||||
| Amortization of debt discount | 551,440 | |||||||
| Interest paid during the quarter | 100,800 | |||||||
| Convertible Notes Payable [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Interest expense | 749,229 | |||||||
| Accrued interest | $ 113,396 | |||||||
| Interest rate | 7.00% | |||||||
SCHEDULE OF SEGMENT INFORMATION (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Segment Reporting Information [Line Items] | |||
| Revenues | $ 425,597 | $ 275,039 | |
| Revenues from Foreign Operations | 420,435 | 268,481 | |
| Loss from Operations | (1,775,803) | (1,395,870) | |
| Total Property and Equipment, net | 6,661,809 | $ 3,776,941 | |
| Total Property and Equipment, net in Foreign Countries | 5,895,352 | 3,329,351 | |
| Total Assets | 25,164,072 | 24,313,732 | |
| Real Estate Development [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Revenues | 420,435 | 268,481 | |
| Revenues from Foreign Operations | 420,435 | 268,481 | |
| Loss from Operations | (385,853) | (103,125) | |
| Total Property and Equipment, net | 5,895,352 | 3,329,351 | |
| Total Property and Equipment, net in Foreign Countries | 5,895,352 | 3,329,351 | |
| Total Assets | 20,103,173 | 17,413,160 | |
| Fashion (e-commerce) [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Revenues | 5,162 | 6,558 | |
| Revenues from Foreign Operations | |||
| Loss from Operations | (358,533) | (125,751) | |
| Total Property and Equipment, net | 766,457 | 447,590 | |
| Total Property and Equipment, net in Foreign Countries | |||
| Total Assets | 3,070,357 | 2,660,305 | |
| Corporate Segment [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Revenues | |||
| Revenues from Foreign Operations | |||
| Loss from Operations | (1,031,417) | $ (1,166,994) | |
| Total Property and Equipment, net | |||
| Total Property and Equipment, net in Foreign Countries | |||
| Total Assets | $ 1,990,542 | $ 4,240,267 | |
SEGMENT DATA (Details Narrative) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
Segments
| |
| Segment Reporting [Abstract] | |
| Number of segments | 3 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Accounts receivable | $ 1,071,876 | $ 927,874 | |
| General and Administrative Expense [Member] | |||
| Entitled to receive reimbursement expenses | $ 228,226 | $ 93,021 | |
BENEFIT CONTRIBUTION PLAN (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Retirement Benefits [Abstract] | ||
| Defined contribution plan cost recognized | $ 18,976 | $ 16,462 |
| Shares issued for benefit contribution plan | 12,476 | |
| Shares issued, price per share | $ 2.23 | |
| Shares issued value for benefit contribution plan | $ 27,821 | |
SUMMARY OF WARRANTS ACTIVITY (Details) - Warrants [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
$ / shares
shares
| |
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |
| Number of Warrants Outstanding, Beginning Balance | shares | 1,584,345 |
| Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 6.01 |
| Number of Warrants, Issued | shares | 750,000 |
| Weighted Average Exercise Price, Issued | $ / shares | $ 1.75 |
| Number of Warrants, Exercised | shares | |
| Weighted Average Exercise Price, Exercised | $ / shares | |
| Number of Warrants, Expired | shares | (310,179) |
| Weighted Average Exercise Price, Expired | $ / shares | $ 6.00 |
| Number of Warrants, Cancelled | shares | |
| Weighted Average Exercise Price, Cancelled | $ / shares | |
| Number of Warrants Outstanding, Ending Balance | shares | 2,024,166 |
| Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 4.44 |
| Weighted Average Remaining Life in Years Outstanding Ending | 1 year 3 months 18 days |
| Intrinsic Value Outstanding Ending | $ | $ 622,500 |
| Number of Shares, Warrants Exercisable Ending | shares | 2,024,166 |
| Weighted Average Exercise Price Per Share Exercisable Ending | $ / shares | $ 4.44 |
| Weighted Average Remaining Life in Years Ending | 1 year 3 months 18 days |
| Intrinsic Value Exercisable Ending | $ | $ 622,500 |
SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
$ / shares
shares
| |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Warrants Outstanding, Number of Warrants | 2,024,166 |
| Warrants Exercisable, Weighted Average Remaining Life in Years | 1 year 3 months 18 days |
| Warrants Exercisable, Number of Warrants | 2,024,166 |
| Range of Exercise Price One [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Warrants outstanding, exercise price | $ / shares | $ 1.75 |
| Warrants Outstanding Exercisable | Common Stock |
| Warrants Outstanding, Number of Warrants | 750,000 |
| Warrants Exercisable, Weighted Average Remaining Life in Years | 2 years 10 months 24 days |
| Warrants Exercisable, Number of Warrants | 750,000 |
| Range of Exercise Price Two [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Warrants outstanding, exercise price | $ / shares | $ 6.00 |
| Warrants Outstanding Exercisable | Common Stock |
| Warrants Outstanding, Number of Warrants | 1,258,833 |
| Warrants Exercisable, Weighted Average Remaining Life in Years | 4 months 24 days |
| Warrants Exercisable, Number of Warrants | 1,258,833 |
| Range Of Exercise Price Three [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Warrants outstanding, exercise price | $ / shares | $ 7.50 |
| Warrants Outstanding Exercisable | Common Stock |
| Warrants Outstanding, Number of Warrants | 15,333 |
| Warrants Exercisable, Weighted Average Remaining Life in Years | 3 years 10 months 24 days |
| Warrants Exercisable, Number of Warrants | 15,333 |
SCHEDULE OF STOCK OPTION OUTSTANDING AND EXERCISABLE (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
$ / shares
shares
| |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding , outstanding number of options | 561,027 |
| Options exercisable, weighted exercise average remaining life in years | 1 year 8 months 12 days |
| Options exercisable, exercisable number of options | 396,491 |
| Exercise Price Range One [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 0.59 |
| Options outstanding , outstanding number of options | 3,334 |
| Options exercisable, weighted exercise average remaining life in years | 3 years 8 months 12 days |
| Options exercisable, exercisable number of options | 1,043 |
| Exercise Price Range Two [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 0.60 |
| Options outstanding , outstanding number of options | 10,001 |
| Options exercisable, weighted exercise average remaining life in years | 3 years 7 months 6 days |
| Options exercisable, exercisable number of options | 3,128 |
| Exercise Price Range Three [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 5.78 |
| Options outstanding , outstanding number of options | 235,998 |
| Options exercisable, weighted exercise average remaining life in years | 2 years 1 month 6 days |
| Options exercisable, exercisable number of options | 155,050 |
| Exercise Price Range Four [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 8.09 |
| Options outstanding , outstanding number of options | 85,338 |
| Options exercisable, weighted exercise average remaining life in years | 1 year 6 months |
| Options exercisable, exercisable number of options | 74,738 |
| Exercise Price Range Five [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 9.08 |
| Options outstanding , outstanding number of options | 102,346 |
| Options exercisable, weighted exercise average remaining life in years | 3 years 6 months |
| Options exercisable, exercisable number of options | 38,428 |
| Exercise Price Range Six [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 11.55 |
| Options outstanding , outstanding number of options | 69,668 |
| Options exercisable, weighted exercise average remaining life in years | 10 months 24 days |
| Options exercisable, exercisable number of options | 69,668 |
| Exercise Price Range Seven [Member] | |
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
| Options outstanding, weighted exercise average price | $ / shares | $ 16.50 |
| Options outstanding , outstanding number of options | 54,342 |
| Options exercisable, weighted exercise average remaining life in years | 8 months 12 days |
| Options exercisable, exercisable number of options | 54,436 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
Mar. 28, 2022 |
Mar. 28, 2022 |
Feb. 03, 2022 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Aug. 14, 2022 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Common stock issued for purchase of domain name, shares | 1,042,788 | |||||
| Shares issued, price per share | $ 2.23 | |||||
| Stock Issued During Period, Value, New Issues | $ 39,600 | |||||
| Equity Method Investment, Ownership Percentage | 21.00% | 21.00% | 79.00% | |||
| Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent | 263,406 | $ 98,980 | ||||
| Stock based compensation | $ 72,700 | 101,453 | ||||
| Contractual Term | 1 year 8 months 12 days | |||||
| Stock based compensation expense | $ 83,054 | 168,649 | ||||
| 2018 Gaucho Plan [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Number of subsidiary options outstanding | 5,502,500 | |||||
| Options exercisable | $ 0.14 | |||||
| Equity Option [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Unrecognized, Amount | $ 347,647 | |||||
| Contractual Term | 1 year 10 months 24 days | |||||
| GGI Stock Options [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Unrecognized, Amount | $ 40,017 | |||||
| Gaucho Group, Inc [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Equity Method Investment, Ownership Percentage | 100.00% | |||||
| Noncontrolling Interest, Ownership Percentage | 21.00% | 21.00% | ||||
| Gaucho Development Srl [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Equity Method Investment, Ownership Percentage | 100.00% | |||||
| Gaucho Group, Inc [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Stock based compensation expense | $ 10,354 | 67,196 | ||||
| Common Stock [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Common stock issued for purchase of domain name, shares | 15,000 | 15,000 | ||||
| Additional Paid in Capital, Common Stock | $ 34,999 | |||||
| Stock Issued During Period, Value, New Issues | $ 36,900 | $ 150 | ||||
| Stock based compensation expense | ||||||
| Common Stock [Member] | Gaucho Group, Inc [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Common stock shares issued to purchase of minority interest | 1,042,788 | |||||
| Common stock issued to purchase of minority interest | $ 2,419,268 | |||||
| Common Stock [Member] | Hollywood Burger Holdings Inc [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Common stock issued for purchase of domain name, shares | 1,283,423 | |||||
| Stock Issued During Period, Value, New Issues | $ 2,194,653 | |||||
| Common Stock [Member] | Forecast [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Shares issued, price per share | $ 2.64 | |||||
SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Leases [Abstract] | |
| Operating cash flows from operating leases | $ 68,232 |
| Operating leases | |
| Remaining lease term | 6 years 1 month 6 days |
| Operating leases | 7.00% |
SCHEDULE OF FUTURE MINIMUM LEASE COMMITMENT (Details) |
Mar. 31, 2022
USD ($)
|
|---|---|
| Leases [Abstract] | |
| For the period April 1 through December 31, 2022 | $ 221,177 |
| 2023 | 303,603 |
| 2024 | 336,102 |
| 2025 | 357,881 |
| 2026 | 368,617 |
| 2027 | 365,004 |
| Thereafter | 120,165 |
| Total future minimum lease payments | 2,072,549 |
| Less: imputed interest | (404,942) |
| Total | $ 1,667,607 |
LEASES (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Apr. 08, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Leases [Abstract] | |||
| Lease term of contract | 7 years | ||
| Maturity date | May 01, 2028 | ||
| Lease remaining term | 6 years 1 month 6 days | ||
| Lease description | Lease payments begin at $26,758 per month and escalate 3% every year over the duration of the lease. The Company was granted rent abatements of 15% for the first year of the lease term, and 10% for the second and third year of the lease term | ||
| Payments for rent | $ 26,758 | ||
| Security deposit | $ 56,130 | ||
| Operating lease expenses | $ 82,965 | $ 0 | |
| Operating lease income | $ 3,745 | $ 0 | |
SUBSEQUENT EVENTS (Details Narrative) |
1 Months Ended | 3 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Nov. 09, 2022
shares
|
May 13, 2022
USD ($)
$ / shares
shares
|
May 12, 2022
$ / shares
|
May 11, 2022
USD ($)
$ / shares
shares
|
Mar. 28, 2022
shares
|
May 11, 2022
USD ($)
$ / shares
shares
|
Mar. 31, 2022
USD ($)
$ / shares
|
May 14, 2022 |
May 03, 2022
$ / shares
|
Dec. 31, 2021 |
|
| Subsequent Event [Line Items] | ||||||||||
| Shares issued price per share | $ / shares | $ 2.23 | |||||||||
| Common stock issued for purchase of domain name, shares | 1,042,788 | |||||||||
| Stock issuance costs | $ | $ 1,399,663 | |||||||||
| Argentine Peso United States Currency Exchange Rate [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Foreign currency exchange rates | 110.9297 | 102.6834 | ||||||||
| British Pound United States Currency Exchange Rate [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Foreign currency exchange rates | 0.7613 | 0.7340 | ||||||||
| Forecast [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Debt conversion, converted instrument, shares issued | 595,165 | |||||||||
| Subsequent Event [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Shares issued price per share | $ / shares | $ 1.35 | $ 0.95 | $ 3.50 | |||||||
| Conversion of shares, percentage | 4.90% | |||||||||
| Debt conversion, converted instrument, amount | $ | $ 1,165,099 | $ 357,498 | ||||||||
| Debt conversion, converted instrument, shares issued | 630,255 | 264,813 | ||||||||
| Debt conversion price | $ / shares | $ 0.95 | $ 1.35 | $ 1.35 | |||||||
| Conversion of stock, shares issued | 1,226,420 | |||||||||
| Common stock issued for purchase of domain name, shares | 55,917 | |||||||||
| Proceeds from issuance of common stock | $ | $ 68,050 | |||||||||
| Stock issuance costs | $ | $ 5,444 | |||||||||
| Subsequent Event [Member] | Argentine Peso United States Currency Exchange Rate [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Foreign currency exchange rates | 117.3984 | |||||||||
| Subsequent Event [Member] | British Pound United States Currency Exchange Rate [Member] | ||||||||||
| Subsequent Event [Line Items] | ||||||||||
| Foreign currency exchange rates | 0.8154 |